Sales And Leads. In last week’s survey we saw what the future in solar may look like. Sales were down from pre-covid levels by 39% holding flat week over week remaining an improvement from the bottom 3 weeks ago. On the other hand, lead volume is up 18%. We are starting to see companies pivoting into the new normal and some executing better than others, some investing into the transition while others are waiting. Close rate will likely drop across the board but your sales force will be able to meet with double or triple the customers than before, more to come on this.
A Growing Backlog. With sales continuing and installations slowed or stopped, there was a concern in my mind that the gap in solar would prolong beyond shelter in place orders. This would happen if companies built out their pre-covid backlog and didn’t add new projects during the current worst times. Good news, 45% of residential installers report that their backlog is growing. This is bad for current revenues but creates an optimistic outlook as business resumes in some fashion.
Look At Building Departments. The issue of getting and closing permits is now split into two concerns for me. Over 50% of building departments are presenting options for digital permitting, some even doing instant permitting. This is a great sign and potentially permanent improvement to make solar installation processes more efficient. On the other hand less than 10% of the AHJs are doing remote or video inspections. I am being told by those that are working on this with inspectors that we can foresee many AHJs moving into this direction soon. We will track this again next week when the bi-weekly survey reopens.
Disconnected Charging. Congrats to FreeWire for raising $25million of new capital. Not a great time to do that but their business is fascinating to me.
How To Run PG&E. PG&E is starting a search for a new CEO as the bankruptcy comes to a close. The business is still complicated and very regulated, with oversight by courts and state regulators in partnership with legislators, employees and unions. The new CEO should have the resume strong in power generation especially as it pertains to competitive power markets. At the same time the values of the new executive team should align with those of the consumers and legislated goals set forth by the State of California. Getting to 100% clean energy shouldn’t just be a task for the CEO, it should be a value that they also believe in.
News And Happenings At Wakeup HQ. Last week, the SolarWakeup podcast kicked back off with fantastic interviews with the CEOs of CleanChoice Energy and Palmetto Clean Technology. In both episodes, we talk about their business and how the new norms are changing market conditions and how they are adjusting. This summer we will also be launching some new products that go to the core of empower solar companies across the ecosystem. Much more to come on this…
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Stay Tuned. For reasons outside of your control, there will not be a column today. Stay tuned for the survey results and a new survey link on Monday. Good news, things are improving.
Stay Safe. I hope you make the best of the situation and by all means use the sunshine to absorb some vitamin D and create some electricity. Thanks to your advocacy friends you can even inject excess electricity into the grid. Please don’t attempt other uses of sunshine however.
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Creating Shared Experiences. Solar advocate, Alex McDonough, joins in an editorial about the need to fight climate change. Flattening the curve is a term that 6 weeks ago meant nothing to most and living the life of a less habitable planet was a figment of an unreachable imagination. Now that our living situation has surpassed the wildest Hollywood script, can we learn and prevent the climate crisis collision course we are steaming towards.
UN Has A Thought. On the 50th anniversary of Earth Day the UN is calling for an economic recovery rooted in environmental benefits. Similarly to the statement by Tom Steyer I covered yesterday, the opportunity to build new jobs in building an expanded climate positive economy.
Let’s Build, Smartly. Marc Andreesen has been quieter when it comes to his digital footprint. As the author of ‘Software will eat the world’ and perhaps the father of tweet threads, when Marc writes it gets talked about. In his article ‘It’s time to build’ he makes the case that we do too little thinking and even less doing when it comes to the big issues facing our Country. I agree with his general thesis and note that the reason may not be doing these things is that capitalism doesn’t reward that kind of execution.
Take The Helm. “The CPUC will closely monitor the selection of PG&E’s next CEO” is the comment that caps the news that PG&E’s Bill Johnson, formerly of the TVA as the highest paid federal employee and formerly of Progress Energy Florida, is leaving this summer. I definitely have some hopes and recommendations for PG&E’s shareholders on how to maximize their value. Here’s the thing, Nextera beat expectations and is going to invest billions on solar and storage and their Governor doesn’t even really care. In California, Governor Newsom not only cares, the legislature has passed policy saying that the goal is 100% renewable energy. Imagine being able to do good, follow policy and maximize shareholder value at the same time.
What Is Climate tech? Alternative energy, renewable energy, clean tech and now climate tech. What does that mean and “what’s in a name? That which we call a rose By any other name would smell as sweet.” That’s the real trick here, I’ve been in solar for 15 years and some of you much longer and it’s always been a market that generally moves up and to the right even as punches and bruises happen along the way. Climate tech has the ability to make the smell a rose because when it comes to free market capitalism, the hope for enormous return requires sentiment on our side. Climate tech is the name today for what we already know but this time everyone wants to get on the train.
Get Involved. Yesterday, many of you started to get involved and some reached out to learn more. The solar module index is exactly what the name says, you (the installer) will share confidentially information about what you’re paying and in return get to see (without names) what everyone else is. It’s like buying an airline ticket online, you have information to make better decisions. I expect that the free slots in the index will run out today so if you’re interested, head to the survey or get more info on the website.
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Product Pricing Volatility. Solar products, especially modules, are constantly changing prices. In a global market, the price being quoted to installers and developers is only good for a very short period of time. This can be harmful when they are going up but can also cost companies tens of thousands of dollars if pricing is dropping like it is now. This is especially true when volumes are at the residential scale. Over the past week, you may have seen the link at the bottom of the newsletter about the solar module index. Even at this early level of participation, I can assure you that the range in pricing for the same module is double digits and volume is not as big of a factor as you would assume. I invite residential installers to join the index so that you can learn what others are paying for the modules you are buying as well. During these uncertain times, you can see that the headlines are tracking pricing volatility as well, make sure you benefit.
California’s Opportunity. Governor Newsom has tapped Tom Steyer to co-chair the task force looking at reopening the economy in California. Part of the work is to understand where the growth can be long term while also understanding the short term impacts to industries like oil. Part of what I’ll be looking for is how California creates a roadmap for the rest of the Country on issues in solar. For example, there appears to be widespread understanding on permitting and inspections in an environment of social distancing. Agencies have released information on how remote inspections occur through continuous video and geotagged photos. If supported legislatively, you could see a solar industry no longer having to wait a day for an inspector to show up and you could see services where homeowners can hire solar experts to review project quality remotely. Better solar, done faster and more cost effectively for consumers. Count me in. The data in the survey this week also highlights the building departments adaptations. I’ll be discussing them at 10am EST this morning with Roth Capital.
Clear Skies, More Sun. Production data from solar projects around the world show higher output with cleaner skies. Less pollution means higher capacity factors for renewable energy, one more reason to make the transition go faster.
Storage Attachment Rises (In Value). One of the questions I asked you this week was how storage is playing in the recovery of solar post-pandemic. We already see very high rates of attachment in California and nearly 100% in Hawaii but the rates of storage utilization is also rising in places like Florida and the northeast. On the other hand, the value of storage in solar is also going up. Here is an interesting view of what that looks like when you dig into the numbers.
Liquidity And Comfort. There are two capital markets deals that caught my eye this week. Mosaic, the residential solar loan company, has expanded its warehouse facility by $50mm with additional length on their term. This should allow the company to go longer between securitizations or moving the loans in larger tranches saving on transaction cost amongst other volume based benefits. Hannon Armstrong was also able to raise new debt for their capital pool at strong rates, in fact able to upside their raise from their anticipated $350mm to $400mm. One concern I had coming into the pandemic was the loss of credit markets a la 2009 but it appears thus far that capital and loans will remain in the market with little change.
DC Headlines. Stimulus package #4 has been replaced with a mini deal of $484billion to refill the PPP funds. For the 20% of you that have not received PPP funds due to fund depletion should be able to benefit from this move. The larger stimulus package now loses some time sensitivity that was politically unappealing given the PPP issue now starts up for debate between Pelosi, Trump and McConnell. Package #4 will be most interesting for solar if oil bailout funds are argued for, that is the opportunity for our market to get stimulus as well. Note that the jobs lost in oil are in line with our losses at this point in the crisis, the need is similar our sector with a much higher upside potential to get folks back to work going forward.
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